Using a centre-two periphery new economic geography model we study the location and
real wage effects of the EU’s Eastern enlargement on current and future EU member
countries under pure trade integration and with migration of skilled labour. The quality
of final and intermediate products differs across countries according to their effective
endowments of human capital engaged in R&D. Allowing for migration prevents the
relocation of firms into the integrating periphery. Moreover, the location of firms differs according to the sectors’ skill and R&D intensity, low skill and low R&D firms tending
to locate in the Eastern and Southern peripheries.